Kenyans can breathe a sigh of relief after the National Assembly Finance Committee proposed revisions to the Tax Laws (Amendment) Bill 2024, including changes to Pay As You Earn (PAYE) and eight other taxes.
A notable proposal involves revising the PAYE tax brackets, addressing widespread discontent over higher tax rates that primarily impacted individuals earning Ksh500,000 or more per month.
During the consultations, stakeholders expressed concerns about the steep 32% tax on incomes between Ksh500,000 and Ksh800,000 and the 32.5% rate on earnings above Ksh800,000. They argued that these rates exceeded the standard 30%, further straining workers’ take-home pay already reduced by other deductions.
In response, the Finance Committee assured stakeholders that the National Treasury would phase out the top tax bands to ensure a fairer system for salaried workers across the board.
Another major adjustment includes scrapping the 5% tax on infrastructure bonds. Stakeholders had warned that taxing government securities could discourage investments critical to national development.
The committee also approved dropping a proposal to increase taxes on internet and mobile data from 15% to 20%. This decision is aimed at supporting digital jobs and expanding access to online services.
Further, lawmakers recommended eliminating the 5% and 20% withholding taxes on digital marketplaces for residents and non-residents. This move is expected to foster growth in Kenya's e-commerce sector.
To revive the tourism industry, the committee proposed exempting park entry fees from Value Added Tax (VAT). They also rejected a proposed excise duty on imported ceramics, sinks, and washbasins.
Similarly, air ticketing services will retain their VAT-exempt status, while a proposed excise duty on imported pasta has been dropped. Lawmakers acknowledged that local production falls short of demand and that such a tax would only drive up living costs.
These revisions highlight a broader effort to strike a balance between generating tax revenue, fostering investment, easing the cost of living, and promoting economic growth across various sectors.
